After January 1, 2013 income derived from capital gains, dividends, and royalties will no longer be exempt from the Medicare Tax. The new 3.8% Medicare Tax (or Unearned Income Medicare Contribution Tax) will be in effect January 1, 2013 and applies to income not derived from ordinary course of business or trade (ie: interest, dividends, annuities, royalties, and rents not related to primary business). The tax is applied to the lesser of either your AGI above a certain threshold ($200K for single individuals or $250K for married couples) or your net investment income.
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